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Special Report on Civil Service Commission Action Concerning Retiree Health Benefits
Background — On December 18, SERA Coordinating Council Chair Bob Kopasz testified before the Michigan Civil Service Commission concerning the Employment Relations Board’s Impasse Panel recommendation to put all active state employees in the New State Health Plan negotiated for state employees hired after April 1, 2010. The NSHP significantly raises co-pays, deductibles, co-insurance, and out-of-pocket maximum. Bob reminded the Commission that state retiree’s average income is $19,500 per year with a $300 maximum annual increase (active employees’ average income is $56,835 and a 2 percent wage increase for 10-1-14).
Bob expressed our concern that the proposed Impasse Panel recommendations, if applied to state retirees, will have a significant negative impact on the ability of retirees to afford their health care benefit.
Here is a summary of the proposed NSHP cost-sharing schedule:
Bob reminded the CSC that historically, non-represented state employees and state retiree health plans have tracked whatever the state employee unions have negotiated in their contracts. In the State Employees Retirement Act (Public Act 240 of 1943) Section 38. 20d, it states that insurance premiums for retirees “shall be in the same proportion of premium payable by the state of Michigan for the classified employees occupying positions in the state civil service.” However, there were exceptions made for prescription drug and other co-pays in 2008 for pre-1987 retirees. Those differences in co-pays were adopted by the CSC in a Memorandum of Understanding dated August 20, 2008 — with an effective date of October 1, 2008. So there was precedent for a different set of co-pays for some retirees than active state employees and these were determined long after active state employee benefits were adopted.
At the December 18 meeting, the CSC deadlocked on approving the Impasse Panel’s recommendations and tabled the matter until January 15. It urged the Office of the State Employer and the unions to negotiate some more and come to a resolution. We assumed that we would be meeting with the Office of the State Employer and Civil Service Commission Benefits staff in the coming months to exchange views on applying the NSHP to retirees.
January 15 CSC meeting — To our great surprise, we received the CSC’s proposed meeting agenda on Friday, January 10 and on it was an item labeled “Interagency Agreement – MOU [Memorandum of Understanding] Retiree Health Benefit.”
Bob acquired a copy of the MOU immediately and found it was already signed by Budget Director John Nixon. It proposed that state retirees be put into the NSHP with no modifications on October 1, 2014. Since Bob and his committee had not yet met with OSE or CSC staff, Bob called the Chair of the Commission Charles Wardrop, OSE Director Jan Winters, and Acting State Personnel Director Janet McClelland to request that the item be removed from the agenda since we had not yet had any joint meetings. Otherwise Bob would have to testify about past practice. There seemed to be agreement with our point of view. However, just in case, Bob prepared some testimony pointing out that the increases in the proposed MOU range from 66 percent to 400 percent!
At the Civil Service Commission meeting, Bob, Cheryl Streberger and Mary Pollock along with a standing room only crowd and media witnessed the MOU being removed from the agenda. Apparently there was a discussion in the CSC’s pre-meeting meeting and our viewpoint was heard!
On the proposed contracts, the Commission heard from the parties and a representative from the Department of Treasury concerning the reported $1.2 billion dollar surplus. Commissioner Robert Swanson then moved to approve the Impasse Panel recommendations with three key amendments. First, to make the contract one year instead of two; second, to keep the health care plan at status quo (which the unions wanted); and three, to remove the .5 percent one-time lump sum proposed for 10-1-14. What seemed like a perfect solution to us failed to garner three of the four possible Commission votes. A vote was then taken on approving the Impasse Panel proposal, which passed 3-1. Commissioner Swanson explained his Yes vote by saying a No vote and deadlock would leave the unions without a contract at all. He felt it was better for the unions to have a contract even if the benefits were not what they wanted. Commissioners Barrett and Wardrop voted Yes. Commissioner Blockett voted No.
We look forward to meeting with state officials concerning retiree health benefits over the coming weeks.
Bob sends his thanks to the 50 people who submitted their out-of-pocket health care expenses to him. He intends to draw from these in upcoming meetings with OSE and CSC staff to explain how severe these proposed out-of-pocket costs will be to state retirees and particularly lower-income state retirees. Over 20,000 state retirees have pensions below $1200 per month/$14,400 per year.
Class Action Against State of Michigan: Taxation of State Pensions (Okrie vs State of Michigan)
As I stated last week, I’ve made some changes to my website, specifically relating to the layout of the LATEST UPDATE section on Okrie et al v State of Michigan et al., the verified class action law suit against the State of Michigan, Governor Rick Snyder, Michigan Department of Technology, Management and Budget, Office of Retirement Services, Michigan State Employees Retirement System, Michigan Public School Employees Retirement System, and Michigan Department of Treasury. Henceforth, the LATEST UPDATE section will be treated more like a blog, providing as many updates as possible, with the most recent news placed at the front, followed by the procedural history of the law suit (if you continue reading) and the posting of my briefs and other pleadings in the case.
As already reported, Governor Snyder signed Senate Bill 652, shifting all cases against the State of Michigan in the Court of Claims to four judges on the Michigan Court of Appeals to be handpicked by the Michigan Supreme Court. SB 652 went into effect immediately, and thus retroactively applies to all pending cases in the Court of Claims, including this one that was before Judge Aquilina.
Interestingly, just today, November 18, after filing an appeal brief in an unrelated case with the Michigan Court of Appeals at the Cadillac Place in Detroit, I found out about the following Order issued on November 14, 2013 from the “State of Michigan Court of Claims” regarding “All Matters Pending in the Court of Claims as of November 13, 2013.” The Order provides:
Michael J. Talbot, Chief Judge, acting under MCL 600.6419 (as amended by 2013 PA 164 effective November 12, 2013) orders:
Proceedings in all matters pending in the Court of Claims as of the [sic] November 12, 2013, effective date of 2013 PA 164 are STAYED for a period of 30 days from the date of the clerk’s certification of this order.”
The order is signed by Michael J. Talbot, Chief Judge, and “[a] true copy [was] entered and certified by Jerome W. Zimmer Jr., Clerk, on November 14. 2013. Given this Order, it would appear that the hearing scheduled for December 13, 2013 will have to be rescheduled.
In the meantime, as I already reported, Judge Aquilina signed an Opinion and Order on November 5, 2013 denying my motion for summary disposition on the breach of contract claim based upon the doctrine of promissory estoppel but granting the State’s motion for summary disposition as to this cause of action. As I previously stated, I will be filing a Motion for Reconsideration of that Opinion and Order before November 26, 2013. In addition, the State of Michigan filed a Motion for Summary Disposition with the Court of Claims in Ingham Circuit Court on November 6, 2013, as to the claims asserted in my amended verified complaint. At some point, I will file a Brief in Opposition to the State’s Motion for Summary Disposition. In light of the November 14, 2014 Order issued by the Court of Claims, it appears that all subsequent filings are to be made with the Court of Appeals.
Finally, I reiterate what I said before that 2013 PA 64 needs to be challenged as it represents an unconstitutional move on the part of the Legislature, the Governor and the Attorney General, which threatens the integrity of the judicial system in this State and calls into question its fidelity to the principles of law and justice. Needless to say, I will challenge the legality of the State’s action in the context of this lawsuit, as it makes a mockery of the idea of an independent judiciary.
Gary P. Supanich
Michigan SERA Pens Agreement with VBS and APSA for SERA Membership Recruitment Program
On Tuesday, February 14, 2012, Michigan SERA Coordinating Council Chair Bob Kopasz signed an agreement with Voluntary Benefits Solutions (VBS) and the America’s Professional Services Association (APSA) to coordinate membership recruitment for SERA on a statewide basis. APSA will contact state employee retirees to offer them a one year free membership in SERA, which will now bring with it not only current SERA chapter programs such as meetings and newsletters, but numerous additional SERA Plus benefits provided through APSA. These include first-year free tax preparation and group discounts on services in the areas of estate planning, tax planning, home and auto insurance, financial services, mortgage services, estate transfer strategies, final settlement planning, and much more.
Recent state retiree and SERA member Cheryl Streberger will be the SERA Plus Program Manager. She will represent APSA with the Michigan SERA Coordinating Council and the 21 SERA Chapters. Some of her duties will include coordinating all SERA Plus marketing activities with all chapters, acting as a liaison between APSA leadership and SERA leadership, and handling any questions from local chapters and members of SERA. She will also make presentations about joining SERA at the Civil Service Pre-Retirement Orientation sessions. Learn more about Cheryl on the SERA Plus contact page.
APSA is a non-profit, non-partisan organization providing access to great discounts on services in many areas of retirement living.
The toll free number for state retirees and near retirees to access SERA Plus benefits through APSA is 855-SERA-PLUS (737-2758).
About Michigan SERA
SERA is an non-profit organization devoted exclusively to issues and concerns of all current and future retirees of the State of Michigan.
SERA works to:
SERA works through its members, leaders, and committees to promote the best interests of state employee retirees and future retirees. At least eight times since 1974, SERA was a moving force in pension increases or benefit improvements. In 2011, we opposed the pension tax and helped eliminate it for 70% of retirees; we opposed the remaining tax on public pensions for those born after 1945 in the Michigan Supreme Court. We opposed the recent state employee retirement system changes. That work continues.
SERA has 21 local chapters statewide that are linked through the Coordinating Council of the State Employee Retirees Associations of Michigan (the SERA Coordinating Council). SERA chapters have periodic meetings with guest speakers, opportunities for networking, newsletters, and other activities.
SERA welcomes the new ideas and energy of new members! To join, call 855-SERA-PLUS (737-2758).